MARKET DEVELOPMENT
20-05-2002
Double-tracking project: Ball is now in ministry’s
20 May 2002 (Business Times) -THE proposed RM12 billion project to doubletrack Peninsular Malaysia’s main railway lines, announced a year ago, ison hold until the Transport Ministry issues the “statement of need†tocontractors — India’s Ircon International Ltd and China RailwayEngineering Corp.Double-tracking refers to the construction of a new track parallel to theexisting one to enable uninterrupted two-way train traffic.Ircon, responding to an e-mail query by Business Times, said it is readyto proceed with the project, but had not received the document whichspecifies the broad technical parameters and contract conditions for theproject from the Transport Ministry yet.Its managing director B.S. Kapur said the “statement of need†will pavethe way for the project to start by the middle of next year.The agreement for the project was supposed to have been signed lastDecember, but it has been delayed due to a variety of reasons.Among these are difficulties in costing. The RM12 billion is supposed tobe paid for in kind, that is palm oil, rather than cash.The fluctuating price of the commodity has complicated the process ofestimating how much will be needed to finance the project, according toindustry observers.“The statement of need by the Malaysian Government may be issued to Irconby end-May and it will form the basis of Ircon’s proposal,†Kapur said.“Ircon will then be given eight weeks to submit its technical andfinancial proposals to the Government.“This will be followed by negotiations which will culminate in anagreement between the Malaysian Government and Ircon,†said Kapur.Malaysia endorsed the participation of China and India in the railwayproject under a RM12 billion counter-trade programme involving payment incrude palm oil for work done.The endorsement was pledged in a memorandum of understanding, which wassigned during Indian Prime Minister Atal Behari Vajpayee’s official visitto Malaysia.The deal will see the delivery of some 8 million tonnes of the commodityover a period of five to six years to both India and China.Malaysia has agreed to parcel out the project to Ircon and a consortiumled by China Railway Engineering Corp.Ircon, which is a state-run engineering and construction firm, willundertake double-tracking and electrification works for the northern gridspanning 338.8km that links Ipoh with Padang Besar. The parcel isestimated to be worth RM6 billion.China Railway and local partners — DRB-HICOM Bhd, Emrail Sdn Bhd and KienHuat Group — will work on the 297km southern grid linking Seremban andJohor Baru, also valued at RM6 billion.The railway forms part of the Trans-Asia Rail Grid stretching fromSingapore to Kunming in south China.“The Ipoh-Padang Besar project has many complex features so thenegotiations are likely to be time-consuming,†Kapur said.He was unable to comment on when the project would get going as it is inthe hands of the Transport Ministry.“It is, therefore, not possible for us to indicate when the agreement willactually be signed and when work on the project will actually commence,â€according to Kapur.He did say, however, that a field survey and data collection are alreadybeing carried out by Ircon’s 27 workers based in Malaysia.“Taking into account the time period of about five to six months foracquisition of land by the Government, the actual construction in thefield may start by middle of 2003,†said Kapur.He confirmed the funding for the project would be against export of palmoil to India. However, the actual modalities have yet to be worked outbetween Ircon and the Government.He said the likely cost of the project would be known only after thestatement of need, which would indicate the detailed specifications, isreceived.On a separate issue, Kapur said the project would not be delayed eventhough Ircon’s former managing director Shri Arun Prasada is underinvestigation by the Indian authorities for alleged graft.There was an article in the Indian Express on March 9 this year which saidthe project may be delayed due to the investigation, but Kapur firmlydenied it.“The investigation in question is due to certain procedural lapses and itwill not have an effect on the execution of the project,†said Kapur.He said Ircon is a public sector undertaking under India’s RailwaysMinistry and the selection as well as superannuation of senior executivesof Government undertakings follow well laid out procedures by the IndianGovernment.“There is no question of external influence having any role to play inthese procedures and the previous managing director Arun Prasada hassuperannuated on January 31 2002 on attaining the age of 60 years as perGovernment rules,†said Kapur. To strengthen Ircon’s commitment in theproject, Kapur said the company has already set up a strong team inMalaysia headed by project director Shri A.P. Mishra, a senior railwayofficer with over 25 years of experience.Ircon first started operations in Malaysia in 1988 and has completed twoprojects which include double-tracking a 10km railway line in the Port ofTanjung Pelepas, Johor.Headquartered in New Delhi since 1976, the company is currently leasing 30locomotives to KTM Bhd.India has one of the world’s oldest and largest rail networks with 7,000trains plying its 130,000km tracks in a day carrying 12 millionpassengers.
